Qualified mortgages: The uncertain future of the GSE patch

Late last month, President Trump’s administration released a wide-sweeping reform and reorganization plan for the federal government. Included in this plan was a proposal to reform two of the largest government sponsored enterprises (GSEs) – Fannie Mae and Freddie Mac – in an effort to lessen government presence in the mortgage market. In anticipation of this possible change, the Consumer Financial Protection Bureau (CFPB) issued a request for information (RFI) from interested parties in order to gain industry input. Read More >>

 

Legal Developments

Short-term CFPB director not short on changes to bureau

Interim director of the Consumer Financial Protection Bureau (CFPB) Mick Mulvaney has not been shy about changing the bureau’s organization and structure during his short tenure on the job. Since he was named acting director in November 2017, Mulvaney has made adjustments within the department aimed at reducing oversight and redundancies, including his recent reorganization of two major offices within the bureau. What those actions will ultimately mean for individual buyers remains to be seen, but there are some potentially significant changes for two large groups of consumers that are worth keeping an eye on over the coming months. Read More >> 

 

Legal Developments

A breath of fresh air: Web Content Accessibility Guidelines updated

In an increasingly online world, financial service providers are tasked with ensuring that their websites can be accessed by all people—regardless of cognitive or physical capabilities. The risks of failure include defense of fair lending claims, given that access to credit (through the internet) should not be denied based on disability. Until the DOJ issues a statement to the contrary, companies avoiding liability and unwanted litigation should aim to fall within the W3C’s guidelines as closely as possible.

To the relief of many, this goal may be more clearly attainable in the wake of the most recent update on June 5, 2018. The W3C issued WCAG 2.1, an updated set of guidelines that builds upon previously established rules and bolsters the organization’s internet accessibility efforts.

Read More >>

Compliance Management, Legal Developments

PHH’s hidden gem

The long-awaited en banc decision in PHH Corp., v. CFPB has finally been issued. The Court of Appeals for the D.C. Circuit upheld the constitutionality of the Consumer Financial Protection Bureau (CFPB) and reversed a prior finding that its structure is unlawful. This case has been discussed for years, with good reason.What is truly notable is the underlying issue that was appealed in the first place:  the CFPB’s new interpretation of RESPA regarding payments for business referrals. 

Read more >>

Consumer Lending and Services, Federal Regulatory, Legal Developments

Federal district court sanctions CFPB for violations of discovery orders

A federal court in Georgia recently imposed sanctions on the Consumer Financial Protection Bureau (CFPB) after finding that the regulator engaged in a pattern of conduct that warranted substantial penalties. While the bureau is usually the accuser of wrongful conduct, it had some explaining to do in CFPB v. Universal Debt Solutions. Read More >>

Consumer Lending and Services, Federal Regulatory, Legal Developments

Remember to update the Ohio Homebuyers’ Protection Act form for 2017

Residential Mortgage lenders should be mindful to not forget to update their Ohio Homebuyers’ Protection Act Informational Document with the 2017 prepayment penalty adjustment. Beginning January 1, 2017, no mortgage broker, loan officer or nonbank mortgage lender may charge a penalty for the prepayment or refinancing of a residential mortgage obligation secured by a first lien if the loan amount is less than $88,503. See Ohio Revised Code 1343.011(C)(2).

The Ohio Homebuyers’ Protection Act Informational Document is required by Ohio Revised Code 1345.05(G). An acknowledgement of the consumer’s receipt must be retained by the lender, mortgage broker and loan officer, as applicable. The Ohio Attorney General and the Department of Commerce may examine your records to ensure that you are providing the most current version of this document to consumers with the 2017 adjusted amount.

Also, don’t forget that Nationwide Multistate Licensing System & Registry (NMLS) renewal season started November 1.

Consumer Lending and Services, Fair Lending, Legal Developments, State Regulatory

Proposed Ohio bill could impact nonbank lenders and credit services organizations

The Ohio General Assembly is considering a major overhaul of Ohio’s banking laws, and hidden within the 443-page legislation are two changes that will likely impact nonbank lenders, lead generators and credit services organizations. Senate Bill 317 was introduced on April 20, 2016, and proposes to do the following:

  1. In the current version of the bill, Section 1103.18 of the Ohio Revised Code would be amended to allow a state-chartered bank to sue and obtain a temporary restraining order, an injunction and damages, including punitive damages, from any person who uses a state bank’s name in an advertisement in a manner that misleads a person into believing that the person issuing the advertisement is associated or affiliated with the state bank.

Thus, mailers showing a consumer’s current bank lender on the envelope, in the envelope window or anywhere in the advertisement could subject the nonbank lender to civil litigation and punitive damages.

  1. The bill also proposes to grant the deputy superintendent for consumer finance authority to examine credit services organizations licensed under Chapter 4712 of the Ohio Revised Code. The amendment, however, is not being made to Chapter 4712. Instead, the amendment has been placed in Ohio Revised Code Section 1181.21(C).

Track the progress of the bill here.

Consumer Lending and Services, Legal Developments, State Regulatory

FDIC under fire following recent string of data breaches

A recent data breach at the Federal Deposit Insurance Corporation (FDIC) is just one of many that have occurred in the past several months. The banking regulator is now under fire for its responses following a slew of breaches involving more than 10,000 sensitive and private data records. The FDIC was questioned about the breaches on May 12, 2016, during a hearing held by the House of Representatives Subcommittee on Oversight. Representatives criticized the FDIC, suggesting that it handled the incidents too slowly, did not notify Congress in a timely manner and failed to provide requested documents.

The FDIC was also criticized for failing to notify its employees who were affected by the breaches. It is estimated that the personal data of approximately 160,000 people have been impacted by these breaches, which occurred between October 30, 2015, and the present. The information includes names, bank account numbers and, possibly, social security numbers. According to Republican Representative Barry Loudermilk, chair of the subcommittee, the FDIC has still not notified any of these employees that their private information may have been compromised.

Evidence shows that at least seven recent breaches were caused by former employees as they were leaving the FDIC. The FDIC maintains that these breaches occurred inadvertently, but Congress is skeptical that the breaches were not intentional. One case is allegedly the subject of a criminal investigation. While the FDIC has indicated that it is completing a “top to bottom review” of its technology information policies, it appears that Congress will continue to apply pressure to the FDIC related to its response and handling of these breaches. According to Rep. Loudermilk in the subcommittee’s press release, the American people “have good reason to question whether their private banking information is properly secured by the FDIC.”  

Depository Institutions, Federal Regulatory, Legal Developments

Announcing our Cybersecurity Law blog

Readers of the Financial Services Law blog are invited to visit our newly-launched Cybersecurity Law blog, an online resource featuring news, information and legal analysis on current cybersecurity and data breach issues. Articles and posts, authored by Bricker & Eckler attorneys, share in-depth insights and legal implications on topics that have both local and global significance.  

We encourage you to subscribe to the blog via FeedBurner to have frequent updates sent directly to your inbox. Additionally, be sure to visit the blog and bookmark the site for easy reference. 

Compliance Management, Consumer Lending and Services, Depository Institutions, Fair Lending, Federal Regulatory, Federal Regulatory, Legal Developments, Non-Depository Institutions, State Regulatory

Are MSAs lawful? CFPB finally makes a statement: It’s all in the facts

The CFPB has just published written guidance on the issue of marketing service agreements (MSAs). These agreements create significant regulatory and legal risk, given that the Real Estate Settlement Procedures Act of 1974 (RESPA) establishes significant civil and criminal sanctions for steering business or providing “kickbacks” for the referral of business among real estate settlement service providers.

In the past year, several major RESPA penalties were ordered by the CFPB, with the bureau’s language striking at the very heart of whether relations between lenders and other real estate participants would ever be deemed lawful. Now, the CFPB has spoken directly to the issue.

In its October 8, 2015, Compliance Bulletin, the bureau has brought considerable doubt as to whether the exchange of money or referrals between providers can ever been free from risk. Read more in the latest Bricker publication.

Consumer Financial Protection Bureau, Legal Developments
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